malaysia pharmaceutical society seminar challenges of setting up...malaysia pharmaceutical society...
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Malaysia Pharmaceutical Society Malaysia Pharmaceutical Society SeminarSeminar
2828thth November 2004, JW MarriotNovember 2004, JW Marriot
Entrepreneurship and Management in PharmacyEntrepreneurship and Management in Pharmacy
“The Challenges of Setting Up A Pharmacy”“The Challenges of Setting Up A Pharmacy”
byby
K L ANGK L ANGB B PharmPharm RphRph MMPSMMPS
1994 ~2003 2004 ~20101994 ~2003 2004 ~2010The Paradigms Shift & SwiftThe Paradigms Shift & Swift
Existing/OldExisting/Old•• Business can be only in Business can be only in
this disciplinethis discipline•• Price WarPrice War•• Paradigm on market Paradigm on market
segments segments •• I am only a retailer?I am only a retailer?
NewNew•• Expand on the discipline of Expand on the discipline of
business segments if want to business segments if want to increase MS & profitabilityincrease MS & profitability
•• Change of thinking re the Change of thinking re the competitioncompetition
•• Focus on customers & Focus on customers & marketingmarketing
•• New services in Community New services in Community PharmacyPharmacy
Challenge ahead…Challenge ahead…•• Increased legislation, regulation & enforcementIncreased legislation, regulation & enforcement•• Competitive market (MNC & IOP)Competitive market (MNC & IOP)•• Pressure on prices & margins (supplier & consumer & Pressure on prices & margins (supplier & consumer &
doctor, peer)doctor, peer)•• Expansion of generics, price & value dropExpansion of generics, price & value drop•• Shortage of pharmacists (New Compulsory Service of Shortage of pharmacists (New Compulsory Service of
Houseman ship)Houseman ship)•• Smart consumer with demanding needs & internet access (kSmart consumer with demanding needs & internet access (k--
consumers)consumers)•• Increased operational cost (rental, overhead & promotion)Increased operational cost (rental, overhead & promotion)•• SARS, Pan SARS, Pan PharmaPharma, , VioxxVioxx recall, What’s next to hit recall, What’s next to hit
Malaysia’s retail pharmacy?Malaysia’s retail pharmacy?•• Unusual Pharmacy winding down,take over, mergerUnusual Pharmacy winding down,take over, merger--
acquisitionacquisition
Business/Marketing PlanningBusiness/Marketing Planning
There are significant challenges to the retail There are significant challenges to the retail pharmacy at present in Malaysia. In such pharmacy at present in Malaysia. In such business environmentbusiness environment~~ The marketing planning helps to decide The marketing planning helps to decide in the present what to do in the future & make in the present what to do in the future & make a profitable transitiona profitable transition~~ marketing strategies based on marketing strategies based on segmentation and product positioning offers segmentation and product positioning offers the keys to success, based on differential the keys to success, based on differential
advantage. We need to evaluate theadvantage. We need to evaluate thesignificance of these factors: significance of these factors: --
Remarks: Retail Pharmacies also need marketing nowadays
The Business planning formatThe Business planning format•• AuditAudit --where are we now?where are we now?•• SWOTSWOT --what are our priorities?what are our priorities?•• ObjectivesObjectives --where do we want to go?where do we want to go?•• StrategyStrategy --how will get there?how will get there?•• TacticsTactics --what are the steps along the way?what are the steps along the way?•• Measurement & controlMeasurement & control--how will we know we’ve arrived?how will we know we’ve arrived?
1. Executive Summary
2. Business Audit
3. SWOT Analysis
4. Assumptions
6. Vision
7. Marketing Objectives
Remarks:
It took 10 years for Caring to prepare a SMART business plan and yet unable to provide a solid business audit due to insufficient external data
8. Strategies
1. Tactical Plans & Mixes
1. Timetable & Budget
1. Measurement & Review
I.e. General Retail Market DevelopmentYear on Year % change in Retail Sales (Weighted) 2002/03
PeriodPeriod MonthMonth % growth in % growth in retail salesretail sales
RemarksRemarks
11stst Q 2002Q 2002 JanJan––Mac 2002Mac 2002 6.16.13.53.5
11stst Q 2003Q 2003 JanJan--Mac 2003Mac 2003 --0.10.1 ••Much lower than the forecasted Much lower than the forecasted 4.4%4.4%••Despite the GDP outperformed Despite the GDP outperformed retail; sales 4% in same Qretail; sales 4% in same Q••Uncertainty of warUncertainty of war
2003 (F)2003 (F) 5%5% ••Forecast beginning of 2003Forecast beginning of 2003
2003 (Rev)2003 (Rev) 2.3%2.3% ••After the poor 1After the poor 1stst & 2& 2ndnd QQ
22ndnd Q 2003(F)Q 2003(F) AprApr--Jun2003Jun2003 --0.20.2 ••SARSSARS
44thth Q 2002Q 2002 OctOct--Dec 2002Dec 2002
Recovered from 911Recovered from 911
Source: MRA/Retail Group Malaysia
Retail SubRetail Sub--SectorSector % Growth% Growth
Retail Sales(Overall/weighted)Retail Sales(Overall/weighted) --0.20.2
Department Store cum SupermarketDepartment Store cum Supermarket 1.81.8
Department storeDepartment store --8.58.5
Pharmacy & personal carePharmacy & personal care --7.4*7.4*
Other specialty storesOther specialty stores 1515Source:MRA/Retail Group MalaysiaSource:MRA/Retail Group Malaysia
*Despite the strong sales from masks & cleansing products, Pharmacy will not escape –ve impact of the SARS outbreak
Retail Sales Projection for 2nd Q 2003
Comment:
The data by MRA on the Pharmacy sector was not truly reflected in Caring Pharmacy performance during that quarter.
Business/Marketing AuditBusiness/Marketing AuditTo examine where are we now we need to To examine where are we now we need to
consider ;consider ;•• Business environmentBusiness environment•• Customer segmentationCustomer segmentation•• Outlets performance & positioningOutlets performance & positioning•• Competitor analysisCompetitor analysis•• Market characteristicsMarket characteristics•• Internal company resourceInternal company resource
11 BUSINESS ENVIRONMENT (PEST)BUSINESS ENVIRONMENT (PEST)
1.11.1 PoliticalPolitical
a.a. LegislationLegislation -- New Pharmacy Act New Pharmacy Act -- National Essential Drug ListNational Essential Drug List
b.b. RegulationRegulation -- Increased drug regulation by DCAIncreased drug regulation by DCA-- EnforcementEnforcement-- Medical Advertisement ActMedical Advertisement Act
c.c. LitigationLitigation -- Defensive /black mailerDefensive /black mailer--doctors, “over doctors, “over --smart “smart “consumerconsumer
d.d. Pressure groupPressure group -- Malaysia Medical AssociationMalaysia Medical Association-- Consumer AssociationConsumer Association
e.e. PricingPricing -- Pressure on margin and pricePressure on margin and price-- MPSMPS-- Drug CompanyDrug Company-- MDTCA or price /promotion control by MDTCA or price /promotion control by govgov..
f.f. GovernmentGovernment -- Dispensing separationDispensing separation-- National Health Insurance SchemeNational Health Insurance Scheme-- HousemanshipHousemanship 3 years3 years
1.21.2 EconomicalEconomical
•• GDPGDP
•• Wealth distributionWealth distribution
•• Health fundingHealth funding
•• InflationInflation
•• unemploymentunemployment
1.31.3 SociologicalSociological
••DemographicsDemographics••PsychographicsPsychographics••Preventative measuresPreventative measures••Social cultural analysisSocial cultural analysis••Local disease incidenceLocal disease incidence••attitudeattitude
1.41.4 Technological:Technological:
•• IT IT –– information age, ICTinformation age, ICT•• New therapies New therapies ––Biotech, Gene Therapy Biotech, Gene Therapy •• Retail innovationRetail innovation-- ee--pharmacy, pharmacy, ee--counsellingcounselling, ,
Market SegmentationMarket Segmentation•• Market segmentation enables us to decide on our Market segmentation enables us to decide on our
priority market segments to target. priority market segments to target. •• The benefits of market segmentation are: The benefits of market segmentation are: --
-- Design marketing mix that matches the need Design marketing mix that matches the need of of community pharmacy market.community pharmacy market.
-- Build up Professional image among Suppliers, Build up Professional image among Suppliers, health policy maker, others health care professional health policy maker, others health care professional and consumers.and consumers.
-- Reduces competition and makes entry harder for Reduces competition and makes entry harder for overseas retailoverseas retail--chain giants . The Hypermarket chain giants . The Hypermarket syndrome..syndrome..
-- Cost effective use of A & P resourceCost effective use of A & P resource
The emerging market segmentThe emerging market segment•• A pharmacy within…(counter pharmacy)A pharmacy within…(counter pharmacy)
–– Health & beauty storeHealth & beauty store–– Personal hygiene storePersonal hygiene store–– Drug store/ medical hallDrug store/ medical hall–– Clinic/medical centre/hospitalClinic/medical centre/hospital–– HypermarketHypermarket–– others: mobile shop, watch shop, optical shop etc..others: mobile shop, watch shop, optical shop etc..
•• A hyperA hyper--pharmacy pharmacy •• A cyberA cyber--pharmacypharmacy•• A mobileA mobile--pharmacypharmacy•• A home base (SOHO) A home base (SOHO) teletele--pharmacy /e pharmacypharmacy /e pharmacy•• A “practicing” /dispensing pharmacyA “practicing” /dispensing pharmacy
* As long as the authority & legislation allowed.* As long as the authority & legislation allowed.
Another definition of emerging Another definition of emerging market segmentmarket segment
•• MNC Chain pharmacyMNC Chain pharmacy•• Franchise chain pharmacyFranchise chain pharmacy•• Independent chain pharmacyIndependent chain pharmacy•• Alliance chain pharmacyAlliance chain pharmacy•• Individual owned pharmacyIndividual owned pharmacy•• NonNon--pharmacist owned pharmacypharmacist owned pharmacy•• Stand alone pharmacy??Stand alone pharmacy??•• You can name yourself….a class by itselfYou can name yourself….a class by itself
22 Retail PharmacyRetail Pharmacy2.12.1 Market Definition: Market Definition: Infancy stage to defineInfancy stage to define•• Market value ??Market value ??•• Market growth ???Market growth ???•• Market value for each market segment ??Market value for each market segment ??•• Rx & self medication ratio ???Rx & self medication ratio ???•• No. transactions per day ???No. transactions per day ???•• No. Prescription per day ???No. Prescription per day ???•• How to audit and position ourselves ???How to audit and position ourselves ???•• The only facts and figures are the number of The only facts and figures are the number of
pharmacist and pharmacies against Dr ratio.pharmacist and pharmacies against Dr ratio.(MOH source)(MOH source)
Retail Pharmacy MarketRetail Pharmacy MarketPharmacy: Pharmacy: Population ratioPopulation ratio
19981998
NationalNational 1: 23,7031: 23,703
KLKL 1: 8,5311: 8,531
GombakGombak 1: 29,9221: 29,922
PenangPenang 1: 9,4001: 9,400
KlangKlang 1: 34,1071: 34,107Source: MOH, data not available since then, much focus on the Pharmacist : Doctor ratio, and no. practising pharmacist & the new graduate each year
Pharmacist /Dr market ratioPharmacist /Dr market ratioPopulation ratioPopulation ratio 19991999 20052005
PharmacistPharmacist 1: 86201: 8620(2320)(2320)
1:5,8291:5,829(4220)(4220)
DoctorDoctor 1:20001:2000(10,000)(10,000)
1:16331:1633(15,000)(15,000)
National Standard in order to achieve Dispensing right for Pharmacist
Pharmacist to DR ratio 1 : 2.4For year 2005, we need 6250 “community practice” pharmacist!
Apparently, we need to have at least 5400 pharmacy~ POTENTIAL
MANUFACTURERSMANUFACTURERS
AGENT/DISTRIBUTORAGENT/DISTRIBUTOROWN DISTRIBUTIONOWN DISTRIBUTION
45% 30% 25%
Dispensing Drs. 45%
Private Hosp.8%
Govt.Hosp22%
Pharmacy10%
Drug Store13%
Others2%
CONSUMERSCONSUMERSMarket covered by MPA: 63%
The chain that multiply & ……
MarketMarketNo. outletNo. outlet
1999*1999*No.OutletNo.Outlet
2003**2003**Value(Value(’’000)000)
Market Market Share(%)Share(%)
Growth(%)Growth(%)
GuardianGuardian 5656 150150
WatsonWatson 4141 7575
PharmacarePharmacare 3232 --
GeorgetownGeorgetown 2929 2525
APEXAPEX 2020 1818
PrimahealthPrimahealth 1515 2525
VitacareVitacare 1212 2222
City ChemistCity Chemist 1010 --
DewmaDewma 1010 --
TotalTotal 225225 315315
* source: AC Niesen Retail Management Services, 4/1999
2.22.2 Market Trends:Market Trends:•• World World Market DirectionMarket Direction
•• The US perspectiveThe US perspective“Prospering in the New Millennium the “Prospering in the New Millennium the community pharmacy way”community pharmacy way”
Updated: October 2003(unless otherwise noted, data is from 2003 NCPA-Pfizer Digest) National Community Pharmacists Association of US
World World Market DirectionMarket Direction……continuecontinue•• Independent pharmacy: Independent pharmacy: $67 billion$67 billion marketplacemarketplace•• Independent pharmacy prescription sales: Independent pharmacy prescription sales: $60 billion$60 billion•• Independents dispense Independents dispense 1.3 billion prescriptions1.3 billion prescriptions annually: annually: •• 41%41% of the retail prescription market of the retail prescription market Prescription medicines are our Prescription medicines are our
business: business: •• 90%90% of annual sales are Rx medicinesof annual sales are Rx medicines•• Average independent pharmacy sales: Average independent pharmacy sales: $2.855 million$2.855 million
up up 15%15% over 2001 over 2001 •• Average number of prescriptions per pharmacy: Average number of prescriptions per pharmacy: 54,427 annually, 174 per 54,427 annually, 174 per
day ,up 6% over 2001day ,up 6% over 2001•• There are There are 23,55223,552 singlesingle--store independent pharmacies, store independent pharmacies,
independent chains, independent franchises, and independent independent chains, independent franchises, and independent pharmacistpharmacist--owned supermarket pharmacies owned supermarket pharmacies 43%43% of the nation's of the nation's 55,20055,200 drugstores drugstores
•• Generic drug utilization Generic drug utilization 48.6%48.6% of drugs dispensed by independent pharmacies are genericsof drugs dispensed by independent pharmacies are generics
•• Independent pharmacies offer a wide range of patient services Independent pharmacies offer a wide range of patient services The top services offered in 2002 were: delivery (88%), charge acThe top services offered in 2002 were: delivery (88%), charge accounts counts (87%), compounding (82%), nutritional (74%), durable medical (87%), compounding (82%), nutritional (74%), durable medical equipment (68%), and health screenings (37%) equipment (68%), and health screenings (37%)
•• More and more independents are receiving payment for the diseaseMore and more independents are receiving payment for the disease management management services they provide: services they provide: Immunizations (85%), lipid monitoring (86%), and osteoporosis scImmunizations (85%), lipid monitoring (86%), and osteoporosis screening (56%)reening (56%)
•• Independents are well connected Independents are well connected EE--mail access in the pharmacy: 88% mail access in the pharmacy: 88% Internet access in the pharmacy: 93% Internet access in the pharmacy: 93%
•• Independents utilize technology Independents utilize technology Pharmacy website: 49% Pharmacy website: 49% Offer refills via website: 71% Offer refills via website: 71% Sell OTC products via website: 40%Sell OTC products via website: 40%
•• Staffing in independent pharmacies Staffing in independent pharmacies Average independent employs 2.6 pharmacists (including owner) Average independent employs 2.6 pharmacists (including owner) Average independent employs 3.3 techniciansAverage independent employs 3.3 technicians
•• Independent Ownership Independent Ownership 29% of independent owners own two or more pharmacies 29% of independent owners own two or more pharmacies The average multiThe average multi--store owner owns 2.6 pharmacies store owner owns 2.6 pharmacies Overall, the average independent owns 1.5 pharmaciesOverall, the average independent owns 1.5 pharmacies
33 THE PRODUCT/SERVICE AUDITTHE PRODUCT/SERVICE AUDIT•• 3.1 3.1 CARiNGCARiNG merchandise/ Service lines:merchandise/ Service lines:
3.2 Retail innovation
YearYear Pharmacy Breakthrough chapter by Pharmacy Breakthrough chapter by CARiNGCARiNG
20012001 C Rx was the first to introduce Quasi Franchise ProgrammeC Rx was the first to introduce Quasi Franchise Programme
3.3 Retail Features and Benefits3.3 Retail Features and Benefits
FeaturesFeatures BenefitsBenefits
Highly efficient & Caring PharmacistHighly efficient & Caring Pharmacist
Attractive price/performance ratioAttractive price/performance ratio
Streamlined range of products (NP)Streamlined range of products (NP)
Customer care Customer care
Complete merchandise for medicineComplete merchandise for medicine
Staffs as assetStaffs as asset
Ethical & compliance to regulationEthical & compliance to regulation
Customer record & History of Customer record & History of MediMedi
Community image & serviceCommunity image & service
Effective Loyalty ProgrammeEffective Loyalty Programme
4.Brand Positioning4.Brand Positioning
•• 4.14.1 COMPETITOR ANALYSIS COMPETITOR ANALYSIS (Merchandise)(Merchandise)
•• 4.2Competitor Price Analysis4.2Competitor Price Analysis
4.44.4 Brand Mapping:Brand Mapping:
•• We compare We compare CARiNGCARiNG with the competitor over a range of with the competitor over a range of parameters to identify differential advantages.parameters to identify differential advantages.
Prescription/(20%)Prescription/(20%) Health & Beauty (80%)Health & Beauty (80%)
<30<30⊕⊕ GTGT
⊕⊕ WW
>30>30
⊕⊕ PP⊕⊕ VV⊕⊕ AA
⊕⊕CARINGCARING
⊕⊕ GG
Prescription (60%)Prescription (60%) Health & Beauty (40%)Health & Beauty (40%)
Sales by Department:
Sales Volume (RMSales Volume (RM’’000)000)DptDpt NameName
20012001 20022002 20032003
PoisonPoison
DispensingDispensing
OTCOTC
VitaminsVitamins
Rehab.Rehab.
First AidFirst Aid
ToiletriesToiletries
OthersOthers
TotalTotal
ContributionContribution%%
GrowthGrowth%%
Market CharacteristicMarket Characteristic•• 55 SWOT ANALYSISSWOT ANALYSIS
internalinternal externalexternal
StrengthsStrengths
WeaknessesWeaknesses
OpportunitiesOpportunities
ThreatsThreats
5.55.5 Critical Success Factor:Critical Success Factor:
5.65.6 Critical Path:Critical Path:•• Right StrategyRight Strategy ::
•• Right PositioningRight Positioning ::
•• Right TargetingRight Targeting ::
•• Right TimingRight Timing ::
•• Right PricingRight Pricing ::
•• Right AttitudeRight Attitude ::
5.7 Mission Statement5.7 Mission Statementwhy we existwhy we exist
5.8 Values
Guilding principles
5.9 Vision Statement5.9 Vision Statement
•• A A company with a clear vision finds it is able to set objectives company with a clear vision finds it is able to set objectives and goals which are understood by its employees and enhances and goals which are understood by its employees and enhances their commitment to achieving themtheir commitment to achieving them
•• What What CARiNGCARiNG wants to become in the future?wants to become in the future?
Mission StatementMission Statement20052005--20102010
To provide integrated To provide integrated healthcare service of utmost healthcare service of utmost
quality and promotion of quality and promotion of healthy lifestyles to the healthy lifestyles to the
communitycommunity
VISIONVISION•• We aim to become the most progressive and We aim to become the most progressive and
efficient independent retail pharmacy in efficient independent retail pharmacy in Malaysia.Malaysia.
•• Continuously improving our quality service Continuously improving our quality service level.level.
•• CostCost--effective innovation merchandisingeffective innovation merchandising•• Dynamic and cohesive teamworkDynamic and cohesive teamwork
Develop our people through empowerment, Develop our people through empowerment, intrapreneurshipintrapreneurship and meritocracy.and meritocracy.
VISIONVISION•• Reward our people through meaningful Reward our people through meaningful
compensation, and incentive programs compensation, and incentive programs designed to provide the basis for its designed to provide the basis for its employees to prosper and for Caring to growemployees to prosper and for Caring to grow
•• Foster a continuous learning environment Foster a continuous learning environment by encouraging our people to upgrade their by encouraging our people to upgrade their skills and knowledge through training, skills and knowledge through training, seminars and talksseminars and talks
•• Responsive to market and be a responsible Responsive to market and be a responsible corporate citizencorporate citizen
Double Double CARiNGCARiNG valuesvalues
Commitment to Community
Attitude with Action
Respect and Responsive
integrity towards innovative services
Natural in Networking
Growth by Governance
CCommitment to ommitment to CCommunityommunityWe toil endlessly to commit the goal of providing quality healthWe toil endlessly to commit the goal of providing quality healthcare service to the communitycare service to the community
AAttitude with ttitude with AActionctionWe earn dignity by Caring attitude with action in all our endeavWe earn dignity by Caring attitude with action in all our endeavorsors
RRespect and espect and RResponsiveesponsiveWe respect everybody and value all feedback responsivelyWe respect everybody and value all feedback responsively
iintegrity towards ntegrity towards iinnovative servicesnnovative servicesWe believe in cultivating an environment of trust among our coWe believe in cultivating an environment of trust among our co--workers where one workers where one must be honest and have a good code of ethics. We want to see omust be honest and have a good code of ethics. We want to see our commercial integrity ur commercial integrity continuing to be a source of innovative services.continuing to be a source of innovative services.
NNaturally in aturally in NNetworkingetworkingWe believe in natural piece of networking with anybody to generaWe believe in natural piece of networking with anybody to generate a higher level of te a higher level of professionalism through sharing and exchanging of resources and professionalism through sharing and exchanging of resources and experiences.experiences.
GGrowth by rowth by GGovernanceovernanceWe strive to grow our business ethically by proper governance atWe strive to grow our business ethically by proper governance at all times.all times.
MOTTOMOTTO
PUNCH/TAG LINEPUNCH/TAG LINE
Our Pharmacist is always on duty Through out business hours
Definition of Terms Used & core ValuesDefinition of Terms Used & core Values
ConceptsConcepts illustrationillustration ContentsContentsObjectivesObjectives DestinationDestination What we need to achieve, Which must be:What we need to achieve, Which must be:
••QuantifiedQuantified••MeasurableMeasurable••DesirableDesirable••realisticrealistic
StrategiesStrategies RouteRoute A description of how we intend to achieve A description of how we intend to achieve objective:objective:••Target Audience/segmentTarget Audience/segment••Key departments/products features/benefitKey departments/products features/benefit
TacticsTactics TransportTransport A description of the actions you will take or A description of the actions you will take or the methods you will use to achieve the the methods you will use to achieve the strategy i.e. promotion policystrategy i.e. promotion policy
MeasuresMeasures BalancedBalancedScorecardScorecard
How strategic success is measured and How strategic success is measured and trackedtracked
Marketing MixMarketing Mix
•• 88 OPERATIONAL PLAN (the 5 P’s)OPERATIONAL PLAN (the 5 P’s)
•• 8.18.1 Product Mix/Merchandise:Product Mix/Merchandise:
Product Portfolio StrategyProduct Portfolio Strategy
We have to allocate our marketing resources We have to allocate our marketing resources appropriately appropriately between products and departmentsbetween products and departments
a. Boston Matrix1.1. PoisonPoison•• (Cash Cow)(Cash Cow)
••High market share in mature & exclusive market.High market share in mature & exclusive market.••No competition from medical hall,No competition from medical hall,••Market growth rapidly in value & unit as new product w high Market growth rapidly in value & unit as new product w high price take place.price take place.••With maintenance strategy are able to generate a surplus cash With maintenance strategy are able to generate a surplus cash flow.flow.
2.2. DispensingDispensing
•• (Star)(Star)
••Cash Cash frfr poison goes to support stars, poison goes to support stars, ••High potential products in rapid growth markets due to High potential products in rapid growth markets due to govgov. . policy to encourage self medication & possibility of policy to encourage self medication & possibility of DEREGULATION of certain medicines classDEREGULATION of certain medicines class••High investment needed and they will break even or be modest High investment needed and they will break even or be modest cash absorberscash absorbers
3.3. Health Health SupplementSupplement
•• (Star)(Star)
••High potential stars due increased awareness in health & diseaseHigh potential stars due increased awareness in health & diseaseprevention.prevention.••Segmented in rapid growth markets especially new Segmented in rapid growth markets especially new biotecbiotec & & functional food supplementfunctional food supplement••High investment needed for A&P activities(Advert/Promoter).High investment needed for A&P activities(Advert/Promoter).••Will be a cash absorber at the beginning.Will be a cash absorber at the beginning.
Boston MatrixBoston Matrix4.4. OTCOTC -- is potential stars in high growth markets butis potential stars in high growth markets but……•• (Problem Child)(Problem Child) -- High potential product but diluted market share to High potential product but diluted market share to
Medical hallMedical hall-- Better alternative in Pharmacy converted to group CBetter alternative in Pharmacy converted to group C-- Will be modest cash absorbers.Will be modest cash absorbers.
5.5. Rehab.Rehab.•• (problem child)(problem child) --Potential has not been realised fully although can Potential has not been realised fully although can
obtaining high loyalty .obtaining high loyalty .--Own Packaging & variety should be fully explored.Own Packaging & variety should be fully explored.--Sufficient investment is needed.Sufficient investment is needed.
6.6. ToiletriesToiletries•• (Dog)(Dog) -- No differential advantage over the open market. No differential advantage over the open market.
-- Overtaken by cheaper in Hypermarket.Overtaken by cheaper in Hypermarket.--Investment should be minimised due to low potential.Investment should be minimised due to low potential.--Can fully capitalise in private label(OEM).Can fully capitalise in private label(OEM).
Boston MatrixIdeal product/merchandise development
Internal flow of funds
Relative contributionRelative contribution
HighHigh LowLow
StarStariiHealth Supplement.Health Supplement.iiDispensingDispensing(may be cash generator or (may be cash generator or
cash absorber)cash absorber)
Problem ChildProblem ChildiiOTC, Rehab, OTC, Rehab, (cash absorber)(cash absorber)
Cash CowCash Cowii PoisonPoison(large cash generator)(large cash generator)
DogDogii ToiletriesToiletries(modest cash generator or (modest cash generator or absorber)absorber)
Hig
hLo
w
Mar
ket G
row
th
b.b. The Composite ApproachThe Composite Approach
•• We looks at our product category in terms of We looks at our product category in terms of embryonic, growth, mature and ageing markets embryonic, growth, mature and ageing markets and looks at and looks at CARiNGCARiNG relative position in terms relative position in terms of dominant, strong, favourable, tenable and of dominant, strong, favourable, tenable and weakweak
•• This is more flexible than the Boston approach, This is more flexible than the Boston approach, but can lend itself to subjectivitybut can lend itself to subjectivity
The Composite PortfolioMarketMarket
CARiNGCARiNGPositionPosition
EmbryonicEmbryonic GrowthGrowth MatureMature AgeingAgeing
DominantDominant
StrongStrongHealth Health
supplementsupplement PoisonPoison
FavourableFavourable DispensingDispensing RehabRehab
TenableTenableFirst aidFirst aid
Wound careWound careSkin CareSkin Care ToiletriesToiletries
WeakWeak CTCT confectioneryconfectionery(A.D. Little)
c.c. Product Life Cycle Product Life Cycle
•• Having decided which products put resources Having decided which products put resources behind, it is vital to choose the correct strategy behind, it is vital to choose the correct strategy and priority. Dividing our 5 products category and priority. Dividing our 5 products category up into their introduction, growth, maturity, up into their introduction, growth, maturity, saturation and decline phase. Each phase saturation and decline phase. Each phase characteristics and strategy options are shown.characteristics and strategy options are shown.
Development PhaseTimeRM -
Profit Curve
Sales Revenue Curve
The Product Life Cycle
RM+
PRODUCT LIFEPRODUCT LIFE--CYCLECYCLE INTRODUCTIONINTRODUCTION GROWTHGROWTH MATURITYMATURITY DECLINEDECLINE
Characteristics:Characteristics:
SALESSALESPROFITSPROFITSCASH FLOWCASH FLOWCUSTOMERSCUSTOMERSCOMPETITORSCOMPETITORS
LowLowNegligibleNegligibleNegativeNegativeEarly adoptersEarly adoptersFewFew
FastFastPeak levelsPeak levelsModerateModerateMass marketMass marketGrowingGrowing
Slow to declineSlow to declineBegin to declineBegin to declineHighHighMass marketMass marketMany Many ‘‘me toome too’’ rivalsrivals
DecliningDecliningDeclining or zeroDeclining or zeroLowLowLaggardsLaggardsTaking marketTaking market
Key actions:Key actions:
STRATEGYSTRATEGYMARKETING COSTSMARKETING COSTSMARKETING EMPHASISMARKETING EMPHASISPRICINGPRICINGDISTRIBUTIONDISTRIBUTIONPRODUCTPRODUCT
Expand marketExpand marketHighHighProduct awarenessProduct awarenessHighHighPatchyPatchyBasicBasic
Market penetrationMarket penetrationHigh (declining %)High (declining %)Brand preferenceBrand preferenceMaintainMaintainIntensiveIntensiveImprovedImproved
Defend shareDefend shareBrand loyaltyBrand loyaltyMaintain/increaseMaintain/increaseIntensiveIntensiveBroaden positionBroaden positionProduct developmentProduct developmentResegmentResegment
ProductivityProductivityLowLowImage maintenanceImage maintenanceRisingRisingSelectiveSelectiveRationaliseRationalise
�� BRAND LIFE BRAND LIFE �� GENERIC LIFE GENERIC LIFE ��
d.d. Growth StrategiesGrowth StrategiesAnsoffAnsoff MatrixMatrix
•• We will want, wherever possible to increase our sales We will want, wherever possible to increase our sales and Department share and choose appropriate and Department share and choose appropriate strategiesstrategies
•• Market PenetrationMarket Penetration :Increase sales from existing :Increase sales from existing customers.customers.
•• Market Development Market Development :finding new customers:finding new customers•• Product DevelopmentProduct Development :introducing new products to :introducing new products to
existing customersexisting customers•• DiversificationDiversification :New products to new :New products to new
customerscustomers
Growth StrategiesGrowth StrategiesCustomersCustomers
ExistingExisting NewNew
penetrationpenetration Market developmentMarket development
Merchandise Merchandise developmentdevelopment
DiversificationDiversification
Exi
stin
gN
EWMer
chan
disi
ng/
terr
itoria
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8.28.2 Price Mix:Price Mix:StrategyStrategy MethodMethod Dept.Dept. Specific Specific Cost plusCost plus Cost plus a fixed marginCost plus a fixed margin
Low cost to achieve Market Low cost to achieve Market shareshare
High price to be profitable High price to be profitable with small sharewith small share
Indexing off the market leaderIndexing off the market leader
Setting the market leaderSetting the market leader
An affordable price for a life An affordable price for a life saving exclusivesaving exclusive
Case to case with flexibilityCase to case with flexibility
PenetrationPenetration
SkimmingSkimming
Competition Competition basedbased
Price leaderPrice leader
MoralMoral
NegotiatedNegotiated
Jaya Jusco launch of its “Cheaper than The Cheaper price nearby
Present Gross ProfitPresent Gross ProfitPrice CutPrice Cut
10%10% 20%20% 30%30%
1%1% 11.111.1 5.35.3 3.43.4
2%2% 25.025.0 11.111.1 7.17.1
3%3% 42.842.8 17.617.6 11.111.1
4%4% 66.666.6 25.025.0 15.415.4
5%5% 100.0100.0 33.333.3 20.020.0
10%10% 100.0100.0 50.050.0
RequiredRequiredSalesSalesVolume Volume increaseincreaseTo stand To stand stillstill
Jaya Jusco price reduction strategy launched in Mac will cost them RM 4 mil in the financial year ending next Feb. (MD Soichi okazaki)
The price cut, implemented across all departments, were in addition to 10%-20% for supermarket products in effect since 10/2001
8.38.3 Place/LocationPlace/Location
•• The criteria that we are qualifiedThe criteria that we are qualified•• ConvenienceConvenience•• Pharmacist availabilityPharmacist availability•• AccessibilityAccessibility•• ExposureExposure•• ComfortableComfortable•• What else>>What else>>
8.48.4 PromotionPromotion•• FlyersFlyers•• “Regular”“Regular” card loyalty program & frequent mailingcard loyalty program & frequent mailing•• Media advertisingMedia advertising•• Community healthy lifestyle programCommunity healthy lifestyle program•• Sales promotionSales promotion•• Can be more and targeted!!Can be more and targeted!!•• ExhibitionExhibition•• Give awayGive away•• Think what we can capitalize our goodwillThink what we can capitalize our goodwill
not only saving for customers!!not only saving for customers!!
8.58.5 PeoplePeopleBOD
ChiefAccountant
SCC
ChiefAccountant
SCC
Shop fitting & Design
AKL
Shop fitting & Design
AKL
Maintenance Executive
AKK
Maintenance Executive
AKK
GeneralMaintenance
ManagerAKK
GeneralMaintenance
ManagerAKK
HR DirectorAKL
Operation DirectorCYS
Merger &Acquisition Negotiator
AKL
ArchitectCK
ResearcherAssessor
StatisticianALL
2010 CARING VIRTUAL ORGANIZATION CHART
Business Dev. DirectorAKL
Financial DirectorTLB
Managing DirectorAKL
Managing DirectorAKL
Marketing DirectorCK
Marketing DirectorCK
Branch Manager18
Pharmacist20
BranchSupervisor
10
Branch OpeningManager
AKK
Branch OpeningManager
AKK
ShopAssistants
90
Company Secretary
SCC
Company Secretary
SCC
AccountsExecutives
VC
AccountsExecutives
VC
Fund Manager
TLB
Fund Manager
TLB
Account Clerks
2
Area ManagerNSS/TLE
Area ManagerNSS/TLE
Legal OfficerSCC
Legal OfficerSCC
OfficeManager
VC
OfficeManager
VC
PropertyManager
TLB
PropertyManager
TLB
Admin.Clerks
2
IS/IT DirectorSCC
IS/IT DirectorSCC
IS/ITManager
OCB
IS/ITManager
OCB
Systems support
OCB
Systems support
OCB
SystemstrainingOCB
SystemstrainingOCB
EDPClerks
2
Drug ISManager
SCC
Drug ISManager
SCC
MerchandisingManager
CK
MerchandisingManager
CK
CDCManager
CK
CDCManager
CK
Chief Buyer
CK
Chief Buyer
CK
Buyer 1(Poison)CK/TLB
Buyer 1(Poison)CK/TLB
MerchandiserML
MerchandiserML
A&PManager
CYS
A&PManager
CYS
Buyer 2(non-poison)
TLB
Buyer 2(non-poison)
TLB
CDCsupervisor
NN/AP
CDCsupervisor
NN/AP
CDCAssistants
8
DeliveryOperators
2
TrainingManager
AKL
TrainingManager
AKL
PRManager
AKL
PRManager
AKL
PersonnelManager
CYS
PersonnelManager
CYS
The LAST “P”The LAST “P”•• PHARMACISTPHARMACIST
–– Owner/Employee/PartOwner/Employee/Part--timer’s attitude are differenttimer’s attitude are different
•• The Role of the Pharmacist The Role of the Pharmacist by WHO consultative group 1997: by WHO consultative group 1997:
“the Seven“the Seven--Star Pharmacist”Star Pharmacist”1.1. CareCare--givergiver2.2. Decision MakerDecision Maker3.3. CommunicatorCommunicator4.4. LeaderLeader5.5. ManagerManager6.6. Life long learnerLife long learner7.7. TeacherTeacher